Lonmin bleeding because of strike

Johannesburg - Lonmin's chief executive Ben Magara said on Monday that the company was "bleeding" as a result of the lenghty and costliest mining strike in history and it might lead to the company's death if not stopped in time.

Magara said earlier that Lonmin had lost a third of its annual production due to the strike over wages.

Lonmin had anticipated a mass return of its employees to work last week, but striking members of the main Association of Mineworkers and Construction Union (Amcu) prevented many other workers from going back to the mines.

Production

The strike has also hit the operations of Anglo American Platinum and Impala Platinum, taking out 40% of global production of the precious metal used for emissions-capping catalytic converters in vehicles.

"The strike has now entered its 17th week," said Magara.

According to Reuters' calculations the strike has cut around 900 000 ounces of industry production to date.

In Lonmin's case, it had been targeting year sales of over 750 000 ounces before the strike began, so it has lost around 250 000 ounces so far.

Official talks

Last week Lonmin said it might go to court in a bid to stop the strike because of its increasingly violent nature and Magara said: "We'll examine all our legal options in this regard."

Magara added there was now a "more visible" police presence around its operations.

Talks with Amcu collapsed in late April and the companies have been taking their latest offer directly to employees via SMS text messages and other means.

Amcu is trying to prevent them from doing this and the matter will be heard in the country's labour court on Tuesday.

Magara said that while official talks with Amcu had broken down, informal channels remained opened and he had spoken to the union's president Joseph Mathunjwa at the weekend.

Pay package

He also reiterated that the strike was making restructuring and job losses "inevitable".

Lonmin has been burning cash of around $60m a month since the strike began on 23 January, though that number was now coming down, Magara added.

The companies have offered pay hikes of up to 10% that would raise the overall minimum pay package to R12 500 a month by July 2017, including the basic wage plus cash allowances for things like housing.

They say they can afford no more, squeezed on one side by soaring costs and the other by low prices.

The industry's problems have been underscored by the platinum price, which is currently up only slightly from its levels on the eve of the strike despite the loss of output.